CLS Plc to Acquire New German Properties
CLS Plc today announced an exchange of contracts for the purchase of office propertyin Berlin for a total consideration of $7.5m, inclusive of all costs.
The properties are Bismarkstrasse 105 and Laibnizstrasse 11 to 13 and comprise 61,059 sq ft of office and storage space. At present the buildings are 77% let by two tenants, the main tenant occupies over 50% of the building on a lease until June 2016. The property was built during the 1960s but was refurbished from 2002 to 2003.
An initial payment of £5,487,000 will be made in December 2006 and the balance is to be paid in December 2007.
Existing rental income is £374,000 and the estimated rental value of the building when fully let is £532,000, which should generate an initial return on equity of 16.1%, cash return on equity is forecast to be 12.1%.
The value of CLSs German portfolio including properties on which contracts have been exchanged but are incomplete is £128.4m.
In a statement the Executive Chairman, Sten Mortstedt, said: "This investment offers good returns and a potential for value increase in a strengthening Berlin market. CLS intends to make further selective acquisitions in Germany, where current yields generate attractive returns on equity, with potential upside in yield compression and rental growth."
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